Question

In: Economics

Show the effect of each of the following events on the market for labor in the...

Show the effect of each of the following events on the market for labor in the computer

manufacturing industry.

a. Congress buys personal computers for all U.S. college students

b. More college students major in engineering and computer science

c. Computer firms build new manufacturing plants

Solutions

Expert Solution

a. Congress buys personal computers for all U.S. college students
This event will increase the demand for personal computers. Since the demand for labour is a derived demand, the demand for labour used in the manufacturing of personal computers will also increase. This causes a shift in the demand function for labour to the right there by increasing their wage rate and the quantity of labour demanded and supplied.

b. More college students major in engineering and computer science
This event would increase the supply of labor that is proficient in manufacturing of computers. This causes a shift in the supply function for labour to the right there by decreasing their wage rate and increasing the quantity of labour demanded and supplied.

c. Computer firms build new manufacturing plants

Within new manufacturing plant there will be an increase in the production of personal computers. This event will increase the demand for workers proficient in manufacturing of computers. The demand for labour used in the manufacturing of personal computers will also increase. There is a shift in the demand function for labour to the right there by increasing their wage rate and the quantity of labour demanded and supplied.

Rahul Sunny answered 2 years ago
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